JPool's smart strategy for distributing the stake between participating Validators
The scoring and stake distribution strategy is currently being evaluated and may undergo certain changes aimed at improving its performance, both in terms of APR for delegators and in terms of advantages for the Solana blockchain.
A validator's APY represents its performance and contribution to the functioning of the Solana blockchain. It is also, obviously, one of the most important parameters our delegators are looking at.
With rare exceptions, the pool is expanded by adding validators that make it into Top 40 by APY.
Several further conditions must be satisfied before a validator is added to JPool:
- Validator may not belong to Top 20 by total stake
- Validator must not be operated by a person running one of the Top 20 (by stake) validators
- Validator must have a logo and a website
- Validator must have been active for at least 10 epochs
In order to determine the stake distribution between the validators in the pool, these are scored based on their APY and several parameters pertaining to stake concentration:
- Validator's own delegated stake
- Total stake in the same ASN
- Total stake in the same data center
- Total stake in the same country
After scores have been calculated for all validators, the pool's total stake is distributed among these proportionally to their score.
With current architecture of the Solana stake pool program, any redistribution of already delegated stake entails certain loss of rewards, as the stake being moved does not generate any rewards until it is reactivated at the end of the epoch.
In order to maximize rewards, JPool's algorithm mostly optimizes stake distribution when new stake is received from delegators or existing stake is withdrawn by them. Actual movement of stake is only performed in case a validator experiences a significant dip in performance or raises its fee, as the losses related to stake redistribution are smaller than losses incurred by inaction.
This way, the algorithm ensures maximum possible APY in the long term.